Beware Apple, Nokia Is Now In The Wearable Tech Game

by CXOtoday News Desk    Apr 27, 2016

nokia

Nokia is making a move into wearables, announcing plans to buy Withings, a French company that makes a range of health and fitness related connected gadgets. With this $191 million acquisition, the Finnish company enters into the consumer wearables market.

While many in the industry may wonder why the company is getting into wearables, the answer is pretty obvious. The Finnish major is looking to make a comeback in a big way into the smartphone game.

In a recent interview to Fortune, Ramzi Haidamus, the President of Nokia Technologies, mentioned that the company is focusing its research on the field of digital health. He said that Nokia has been developing a digital health strategy called WellCare, hinting at a similar product portfolio to that of Apple’s HealthKit.

Therefore, the acquisition of Withings, which makes not only wearables but also blood pressure monitors and other medical devices, will help in accelerating its plans.

If this turns out to be a smart bet, then tech titans like Apple and Samsung may have reasons to worry about.

Seeking a digital health pie

“We have said consistently that digital health was an area of strategic interest to Nokia, and we are now taking concrete action to tap the opportunity in this large and important market,” Nokia president chief executive Rajeev Suri said in a statement. 

Health tracking devices have become increasingly popular, with Fitbit and Jawbone being the highest profile firms to emerge in the space. According to a research from IDC, more than 78 million wearable devices were sold last year, including the Apple Watch, a rise of 172 percent on last year.

Founded in 2008, Withings not only makes smartwatch activity trackers, but also makes devices such as blood pressure monitors and scales as well as several apps. As an article on MIT Technology Review said: “Withings has been consistently lauded for clever, good-looking products like its smart watches, and its upcoming $100 Thermo smart thermometer even managed to impress this jaded journalist at January’s CES gadget show.

By snagging the company’s existing range of gadgets, which are in small but growing consumer-electronic niches—smart watches, activity trackers, smart scales, a smart alarm clock, and so on—Nokia gets a wide array of options for rolling out its own wearables and connected home devices in the future (and it’s already got the networking chops to make such things work well).”

“We’ve been impressed with the plans the Nokia team has shared with us both for Preventive Health and Patient Care,” Withings CEO Cedric Hutchings mentioned in the company’s blog.

“As soon as we close the deal, we can start working together to determine our way forward as one team with a broad but focused portfolio of incredible products and innovations,” he said.

A smart move

Experts believe the acquisition could make sense for Nokia, once the biggest cell-phone maker in the world. The company completed the sale of its phone business to Microsoft in 2014 and now runs just networking-equipment and research-and-development divisions.

There are even possibilities that it may come up with smarter ways to make phones work with these gadgets in order to differentiate itself from competitors like Samsung and Apple. 

Experts however cautioned that Nokia should be wise to keep in mind the fate of Cisco, the biggest maker of computer networking equipment, which tried for years to make its consumer business work until finally giving up in 2013. However, going by its earlier track record, one can say, the brand has potential to bounce back with a little help.

“Studies show us Nokia is a trusted brand,” Ramzi Haidamus, who heads the Nokia Technologies unit from San Francisco, said in an interview with Bloomberg. “So it’s very compatible with health.” Nokia said it’ll decide on re-branding Withings’ products when the transaction closes in the third quarter.

Sales of wearable consumer devices such as health and fitness bands will make up $32 billion in sales by 2019, about three times the 2013 figure, according to a report by researcher IHS. 

Hutchings too is upbeat on the association. “As soon as we close the deal, we can start working together to determine our way forward as one team with a broad but focused portfolio of incredible products and innovations,” he said adding that the cash deal is expected to close in the third quarter.